The August employment report painted a disappointing picture of U.S. job creation for the month, with the economy adding only 235,000 positions, according to the U.S. Bureau of Labor Statistics.
It was the smallest number of jobs added in seven months after July had the most jobs created in 10 months. Economists polled by Reuters projected an increase of 728,000 jobs, underscoring the discouraging August data. With COVID-19 infections surging once again, the virus’ impact is once again being felt in several industries and the jobs report reflected the situation.
Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association, said that while data from prior months indicated that employers “were gearing up to meet the increasing demand for goods and services,” August data showed the effects of the delta variant’s growing spread.
“This was the first time in six months that leisure and hospitality hiring did not show a gain and the second month in a row that retail trade saw a decline,” Kan noted.
The leveling off in hiring for the leisure and hospitality sector is especially striking when considering it had added an average of more than 370,000 jobs for each of the previous three months. Hiring at restaurants and bars fell by 42,000 from July while hiring at hotels and motels fell by 34,600.
“Overall payroll employment is still 3.5% below where it was pre-pandemic,” Kan said, “and the leisure and hospitality sector remained 10% behind.”
Construction jobs fell by 3,000 in August, although Kan observed that the decrease was driven by nonresidential construction. Residential construction hiring was unchanged from July.
“Given the challenges that the homebuilding sector has been facing for building costs and labor shortages, this should continue to support builders’ abilities to sustain higher levels of new construction,” Kan said.
Despite the disappointing job-creation figures, other details in the jobs report suggested that the fundamentals within the employment market remain strong. The unemployment rate, for example, fell to 5.2%, its lowest point in 17 months. The number of workers unemployed for 27 weeks or more dropped by 246,000. Kan noted that this decline may have been precipitated by expiring unemployment benefits in some states.